Monday, February 4, 2013

Emirateshas officially announced that it shall be launching a new long haul route to Tokyo's Haneda (HND) airport operated
nonstop from Dubai as the carrier aggressively targets expansion in
high yielding SE Asian markets that have good premium class demand in
particular. EK will be operating a daily nonstop service on the DXB-HND sector using a B777-200LR effective 03JUN13 with the below mentioned timings:EK 312 Dep DXB 0940 Arr HND 0005+1
EK 313 Dep HND 0130 Arr DXB 0705The above mentioned service compliments its currently exisiting daily A380 nonstop service to Tokyo's Narita airport.

Swiss Airline'sCEO has officially revealed in an interview to Bloomberg that the airline is actively looking out for a plane that can
offer larger capacity than its current Airbus A340-300s as it finds the
latter a bit too small for many of its long haul routes that can fill the additional seats offered by a bigger aircraft. LX is evaluating the B747-800, B777-300ER and the A350 family for a potential future order but has ruled out the Boeing 787. Source: http://www.bloomberg.com/news/2013-01-22/swiss-mulling-747-8-for-fleet-upgrade-following-parent-lufthansa.html

Analysis:1. One does not believe that the B748i should even be looked by LX management nor even by LH for LX because of the following:

a) Currently, LX 's A343s seat 219 pax in a 3 class configuration i.e. 8F/47J/164Y where as LH 's
B748s in 3 classes seat 358 i.e. 8F/92J/262Y. For any airline to have
their largest plane capacity size increase from 219 to 362 aka by 65%
and have a chance at selling it consistently year long is a tall task to
undertake. You can increase by 30-40% maximum if you have all the right
mechanisms in place which LX does, but not by 65% all of a sudden !

b) The B748 is way too big for any LX route to operate on a "year round
basis" which is the main point here as its not a carrier that lives on
seasonal demand. LX
is a premium focused airline that relies more on offering frequencies
versus excess capacity on any given route as that is the main demand of
corporate high yielding passengers i.e. choice of schedule flexibility
when making their travel plans.

Now as far as which plane is ideal for LX in the long run as the perfect A343 replacement, my thoughts are as follows:

a) To begin with, this order I reckon Boeing lost from the get go by
still not being clear on their B787-1000X program. Due to this
uncertainty on their part, this is another order which they could have
gotten a new customer but instead are likely to lose it due to this
aircraft type still not being offered for sale in the market place. Just
like the A350 family has 3 different types catering to different market
size segments, the B787 program too needs a 3rd larger unit
complementing the B788 and B789 as neither one of these 2 models can
adequately replace the A343 nor the B772ER in the long run.

b) However, since the A343 is more or less the same size as an A359 and
with LX 's
desire to have a bigger plane operate on some of its routes year round,
the only plane in today's current environment meeting LX 's requirement
is the A340-600 which in LH 's 3 class layout seats 306 pax i.e. 70
more than LX 's A333s aka 30% more. For the time being, this is ideal as
it would allow LX
the perfect schedule flexibility of having the A333 operate on the
under 11 hours routes across its network with a 236 seater A333 and have
the A346 operate on the ultra long haul nonstop flights to Latin
America, U.S. West Coast and SE
Asia where the revenue derived from selling the extra seats on board
the A346 (especially the higher yielding F/J class ones) shall come in
handy big time.

c) But in order to structure a deal that benefits LX the most in the
long run, the order should go to Airbus with the following conditions
attached:

i. As a "stop gap capacity measure" in exchange for a size able A350
order, Airbus must supply LX with at least 8-10 A346s until the A350s
get delivered. Currently, there are 3 airlines in particular that are very keen on selling their A346 fleet and they are TG, QR and VS respectively.

ii. The A350 versions (if it lives up to its expectations) which are
ideal for LX 's future are both the A359 and the largest member i.e.
the A351. The A359 is the perfect replacement candidate aircraft for LX
's
A333 fleet by 2020-21 as it offers about 10-15% more capacity which is perfect as the airline expects its passenger demand scale to grow by a
similar margin if not more within a decade on currently operated A333
routes. A 3 class configured A359 would easily be able to accommodate
approximately 260 passengers in a comfortable layout to replace the 236
seater A333s. In addition, due to its much longer range, the A359 can
operate all of LX 's
current long haul routes nonstop without any payload restrictions what
so ever so an excellent value for money aircraft for the airline to
consider purchasing. Currently, LX
operates 14 A333s so if one factors in modest growth for the next 8
years, an order for 18 A359s seems adequate for the airline to order.

iii. In addition to the A359, the larger A351 is the perfect high density long haul premium aircraft for LX
to revolve its fleet around during the 2020-30 decade. In a luxurious 3
class configuration, it would easily be able to accommodate 340
passengers and fly up to 13-14 hours nonstop without any payload
restrictions. This means having approximately 12% more capacity than
today's A346 in LH 's 3
class configuration and operated with an aircraft that is destined to
have at least 15-20% better operating costs on long haul flights.
Currently, LX
has 15 A343s operating in its fleet, so once again if you factor in
modest growth over the next decade, an order for easily 20 A351s should
do justice.

iv. One last very interesting point in LX 's
favor is that with all the bad publicity surrounding the A351 since
Summer 2012, Airbus will bend backwards in offering ultra lucrative
deals to blue chip airlines such as LX in order for a large reputable
A350-1000X order being placed as they did with CX recently. This in turn
can result in LX
getting financially attractive large discounts on the purchase price as
well as other forms of incentives from the airplane manufacturer in
exchange for this order for 20 A351s + 18 A359s which at list prices
would be worth over US$ 7 billion.

v. Since LH now tends to
order airplanes in bulk for its group subsidiaries as well, it has a
fleet of 24 A343s + 18 A333s + 24 A346s that need replacing within a
decade as well. Hence for the LH /LX
group to really arm twist Airbus into giving a deal that they cannot
say no to (in terms of volumetric discounts for a large scale order
being placed), the prospective potential order size could very well end
up being for 65 A350-900s (for LH /LX
combined) + 50 A350-1000X totaling over US$ 20 billion at list prices!
And for the latter program, Airbus wins too by getting 2 world famous
airline brands such as LH and LX ordering and endorsing the A351 program
along side QR /CX which will end up getting more airlines to order this
variant in the future.Thai Airwayshas revealed that it will be considerably increasing its presence in the Dhaka market place
by adding a second daily nonstop service from the on set of the IATA
S13 season i.e. April. All double daily flights shall be operated by a 2
class configured Boeing 777-200A and the flight schedule of the two
services will be as follows:

The
new flight is the one that departs BKK at 2330 and arrives back by
0555. In addition to the above, TG has also revealed many other capacity
changes to its medium and long haul route network for the upcoming IATA
S13 season of which the main highlights are as follows:

Saudia Airlines
has officially announced many changes to its overall route network for
the upcoming IATA S13 season from both its Riyadh and Jeddah hubs
respectively of which the main highlights are as follows:

Turkish Airlines has officially announced that it will be launching new services to KUL-Kuala Lumpur, Malaysia effective 25APR 2013
as the carrier looks to expand its long haul network aggressively
particularly where high volume feeder traffic can be obtained to help
adequately feed its ever expanding European network. TK will be flying
nonstop from its IST base to KUL four times per week using an A340-300
with the below mentioned timings:

Days - 1/3/4/6

TK 60 Dep IST 0115 Arr KUL 1650
TK 61 Dep KUL 2315 Arr IST 0535+1

In addition, TK too confirmed that due to increasing demand for its DAC-Dhaka bound flights, it will be further increasing its presence on this sector by operating daily nonstop flights using an A330-200
versus its current 5 weekly service. This comes into effect from
05JUN13. TK's main DAC traffic originates from Italy, ATH, JFK, UK,
Libya and Germany.

British Airways
has revealed many changes to its long haul route network for the
upcoming IATA S13 season of which the main highlights are as follows:

DAR - all 3 weekly flights suspended effective 31MAR (this is going to help KL/TK/QR a lot in particular)

JED - frequencies increased from 5 weekly to daily nonstop using a B763ER

Air Asia X of Malaysia has officially confirmed that it shall be launching a new long haul service to JED-Jeddah, Saudi Arabia effective 16FEB 2013 as
the carrier wants to take part in the mass volumetric Umrah and Hajj
religious demand on this route along with catering to Saudi holiday
traffic bound to Malaysia year round. D7 will be operating the service nonstop 4 times per week using an A330-300.

Hainan Airlines based out of Beijing, China has officially announced that it will be launching new nonstop flights to ORD-Chicago, USA effective
03SEP 2013 as the carrier looks to further consolidate its position in
the U.S. market place with its partner American Airlines. HU shall be
operating 4 times per week nonstop service on this route using a Boeing
787. Currently, its scheduled as an A332 operated service but that is
temporarily only due to the on going B787 technical grounding worldwide.
The flight schedule is as follows:

Days: 2/4/6/7

HU 497 Dep PEK 1320 Arr ORD 1330
HU 498 Dep ORD 1530 Arr PEK 1840+1

Air China has officially announced that due to increasing demand for its Milan
(MXP) bound services out of its secondary PVG-Shanghai hub, it will be
up gauging the number of weekly frequencies it currently offers to meet
the demand. Currently, CA operates 5 weekly nonstop flights between MXP
and PVG using a 2 class configured A330-200. These will be increased to
daily nonstop flights using the same aircraft type effective 01APR13.

In addition, CA too revealed that it will be launching new nonstop services to GVA-Geneva
from its primary Beijing hub effective 07MAY 2013. It will be operate 4
times per week using an A330-200 and will be code sharing with its STAR
partner SWISS on this new route that is expected to attract good loads
upfront in business class especially along with cargo.